For decades, rare earth elements did their work in silence — tucked inside electric motors, defense guidance systems, and the magnets that make AI data centers hum. Most people have never heard of neodymium or dysprosium, yet these 17 minerals quietly underpin much of modern industry.
That quiet was broken in 2025. Export controls from a single dominant supplier sent ripples through global manufacturing, leaving some producers struggling to secure key inputs — and in certain cases, cutting output entirely.
What’s now becoming clear is just how concentrated, and how fragile, these supply chains have always been.
From niche minerals to economic linchpins
The 17 rare earth elements were once curiosities of the periodic table. They now function as structural pillars of the modern economy. High-performance permanent magnets — built from neodymium, praseodymium, dysprosium, and terbium — drive the electric motors in EVs, power industrial robotics, and keep AI data center infrastructure running. Defense guidance systems depend on them as well.
Demand for these magnet rare earths has doubled since 2015. The IEA projects more than 30% additional growth by 2030, with further acceleration as automation and digitalization deepen. The IEA’s recent report, Rare Earth Elements: Pathways to Secure and Diversified Supply Chains, was developed specifically to inform G7 discussions under France’s 2026 presidency — a signal that policymakers at the highest levels are treating this as an urgent economic challenge, not a future contingency.
One country, one chokepoint
The concentration of rare earth supply in a single country is striking at every level of the value chain. China currently accounts for roughly 60% of global mined production of magnet rare earths, its share of refining sits above 90%, and in permanent magnet manufacturing it commands nearly 95% of global output.
What makes this more than a static snapshot is how that concentration has deepened over time. Two decades ago, China held around half of global permanent magnet production. That share has grown steadily while the rest of the world largely stood still. Among all critical minerals tracked by the IEA, rare earths rank among the most geographically concentrated at every stage — mining, processing, and manufacturing alike.
When export controls exposed the fragility
The theoretical risks became concrete in 2025. Export controls introduced by China that year caused immediate disruptions: manufacturers outside China struggled to secure key inputs, and some were forced to reduce production. Flows eventually recovered, but the episode demonstrated something that years of policy discussion had not — supply concentration can translate into real economic harm with very little warning.
The potential scale of that harm is significant. The IEA estimates that if such controls were fully implemented, up to $6.5 trillion in annual economic activity outside China could be at risk. The sectors most exposed are automotive, electronics, and other transport industries — precisely those betting their futures on electrification and digital integration.
A pipeline that falls far short
Despite growing awareness of these vulnerabilities, the supply diversification response has been slow. By 2035, existing and announced projects outside China are expected to cover only around half of mining requirements, about a quarter of refining needs, and less than a fifth of magnet demand. The gap between projected need and available supply is not narrowing — it is widening.
The imbalance within the pipeline is particularly telling. Planned magnet production capacity outside China amounts to only about a third of planned mining capacity. Upstream investment is running well ahead of the downstream processing and manufacturing capacity that actually delivers finished components, and refining and magnet manufacturing have been identified as the critical bottlenecks.
Closing the full gap would require approximately $60 billion in investment over the next decade. That figure sounds large in isolation, but it looks rather different when weighed against the $6.5 trillion in annual economic activity that supply disruptions could put at risk.
Pathways forward: recycling, innovation, and cooperation
No single solution resolves this challenge. Recycling alone could cut the need for newly mined rare earths by up to 35% by 2050. Advances in substitution technologies and innovative production methods may ease constraints on the most tightly supplied elements, though these remain works in progress — and together, these approaches could meaningfully reduce pressure on primary supply.
The IEA is clear that no individual country can build a fully integrated rare earth value chain on its own. The geographic distribution of resources, processing capabilities, and industrial demand makes international cooperation a practical necessity, not just a diplomatic aspiration. The report outlines eight concrete actions, among them strengthening emergency preparedness, scaling investment across the full value chain, and improving price transparency to support market-driven decisions.
The next few years will reveal whether governments and industries treat the 2025 disruption as a one-time warning or a preview of recurring risk. The investment decisions made — or deferred — before 2030 will largely determine which it turns out to be.
